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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Quanta Services Inc was -0.61. The lowest was -3.88. And the median was -2.54.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Quanta Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9162||+||0.528 * 1.2007||+||0.404 * 0.8153||+||0.892 * 0.9289||+||0.115 * 0.9806|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9465||+||4.679 * -0.0617||-||0.327 * 1.3366|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,385 Mil.|
Revenue was 1792.43 + 1713.737 + 1899.272 + 1939.438 = $7,345 Mil.
Gross Profit was 200.217 + 203.313 + 223.039 + 235.215 = $862 Mil.
Total Current Assets was $2,244 Mil.
Total Assets was $5,297 Mil.
Property, Plant and Equipment(Net PPE) was $1,161 Mil.
Depreciation, Depletion and Amortization(DDA) was $200 Mil.
Selling, General & Admin. Expense(SGA) was $613 Mil.
Total Current Liabilities was $1,208 Mil.
Long-Term Debt was $401 Mil.
Net Income was 16.562 + 20.496 + -5.074 + 216.388 = $248 Mil.
Non Operating Income was -1.103 + 0.081 + -0.567 + -1.07 = $-3 Mil.
Cash Flow from Operations was 66.528 + 199.739 + 201.191 + 110.209 = $578 Mil.
|Accounts Receivable was $1,627 Mil.
Revenue was 1872.34 + 1861.386 + 2027.614 + 2145.958 = $7,907 Mil.
Gross Profit was 227.505 + 237.906 + 311.628 + 336.903 = $1,114 Mil.
Total Current Assets was $2,316 Mil.
Total Assets was $6,131 Mil.
Property, Plant and Equipment(Net PPE) was $1,130 Mil.
Depreciation, Depletion and Amortization(DDA) was $190 Mil.
Selling, General & Admin. Expense(SGA) was $697 Mil.
Total Current Liabilities was $1,179 Mil.
Long-Term Debt was $214 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1384.554 / 7344.877)||/||(1626.833 / 7907.298)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1113.942 / 7907.298)||/||(861.784 / 7344.877)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2244.387 + 1160.87) / 5297.101)||/||(1 - (2315.567 + 1129.597) / 6130.51)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(190.026 / (190.026 + 1129.597))||/||(199.806 / (199.806 + 1160.87))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(612.608 / 7344.877)||/||(696.764 / 7907.298)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((401.119 + 1208.089) / 5297.101)||/||((214.255 + 1179.148) / 6130.51)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(248.372 - -2.659||-||577.667)||/||5297.101|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Quanta Services Inc has a M-score of -2.98 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Quanta Services Inc Annual Data
Quanta Services Inc Quarterly Data